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dynamic efficiency, innovation
Advantages for consumers
high prices reduce consumer surplus
disadvantages for consumers
abnormal profit, EofS
advantages for producers
DofS, little incentive for efficiency
Disadvantages for producers
Without patents and monopoly power, drug companies would be unwilling to invest so much in drug research
Advantages for consumers: innovation — AO2
Google has monopoly power on search engines – but can we say Google is an inefficient firm who don’t seek to innovate
Advantages for consumers: dynamic efficiency — AO2
Microsoft had a monopoly on PC software and charged a high price for Microsoft Office
Disadvantages for consumers: high prices — AO2
With no competition, a monopoly can make profit without much effort,
Why is there little incentive for monopolies to be efficient?